BackHousing.com, in bid to turn a profit, hires Alvarez & Marsal
Advisory firm has been asked to help curb cash burn and streamline investment plans at the property website
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Bengaluru: Housing.com has hired restructuring advisory firm Alvarez & Marsal Holdings, LLC to suggest ways to turn the property listings website profitable, said two people familiar with the development.
Alvarez & Marsal has been asked to help reduce cash burn at Housing.com, which recently sacked its chief executive officer (CEO) Rahul Yadav, and help streamline its investment plans, the two people said, declining to be named.
“More than a makeover of image, Alvarez & Marsal will focus more on how the money will be routed, and tighten the cash burn," one of the two people cited above said, adding that it will also try and ensure that Housing.com is choosing the right investment opportunities. Alvarez & Marsal has been appointed for six months, the second person said.
SoftBank and other investors in the Mumbai-based realty website are trying to cut costs, restructure businesses and boost revenue as part of a plan to turn the firm profitable. The hiring of Alvarez and Marsal stems from the need to reorient the firm’s strategy following months of turmoil between investors and Yadav over the running of Housing.com. The series of public spats with investors led to Yadav’s ouster on 1 July.
Advisers such as Alvarez and Marsal can provide insights on value chain, scalable approaches, risk and sustainability of business models, said Ankur Bisen, senior vice-president of retail and consumer at consultant Technopak Advisors. “Today, the e-commerce firms are large in size in India as far as cash reserves are concerned. So, at a certain point of time, these companies also need an objective analysis from independent advisers," he said.
While Alvarez and Marsal has been hired by financially-troubled firms such as Jet Airways (India) Ltd and ABG Shipyard Ltd in India, Housing.com is likely to be the only e-commerce start-up to have hired the advisory firm’s services.
The majority of shares in Housing.com are currently owned by six private equity and venture capital investors including SoftBank, and Nexus Venture Partners, who have invested $120 million in Housing since 2012.
Mails sent to the spokespersons of Housing.com, SoftBank and Nexus Venture Partners on Friday remained unanswered. A mail sent to Alvarez & Marsal on Thursday also did not elicit a response.
In December 2014, Housing’s parent Locon Solutions had raised about $90 million from investors, including SoftBank, Nexus Venture Partners, DST Global LP, Falcon Edge Capital, LP, Digital Nirvana Fund Co. Ltd, Qualcomm Ventures and Helion Venture Partners.
Since Yadav’s ouster, Housing.com has revamped its management team by appointing chief operating officer Rishabh Gupta as the firm’s interim CEO.
Gupta, Haresh Chawla—an angel investor in Housing.com and former CEO of Network18— and Abhishek Anand (chief technical officer) have joined the company’s operating committee, as part of the reshuffle. This month, Housing.com named Jason Kothari as its chief business officer and member of the operating committee to drive growth in India. Jason was the co-founder and CEO of Valiant Entertainment, a character-based entertainment company.
Housing.com, which competes with CommonFloor, 99Acres, PropTiger and MagicBricks, has more than 2,551 employees in over 100 cities across India.
On 10 August, The Economic Times reported that Housing.com plans to lay off at least 600 employees over the next three months, as it steps up focus on its core technology and product. MagicBricks is owned by Bennett, Coleman & Co. Ltd, the publisher of The Economic Times.
But Housing.com is still active in the buyout market. Last week, it bought for $2 million Sadanika Solutions Pvt. Ltd, a sales management cloud services provider firm that runs HomeBuy360.
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